In under three years, LSG Group became a mission-critical, infrastructure-like market leader.

Key takeaways

• Airlines need trusted catering partners regardless of economic cycles, creating high barriers to entry, making SkyChefs akin to an infrastructure asset.
• AURELIUS WaterRise drove the global carve-out of LSG Group from Lufthansa and implemented a new focused, regional strategy. The first sale of a regional entity this year has repaid the entire investment.
• The transition from slow global conglomerate into agile regional champions was spurred by empowering and enhancing regional management teams, massive investment into SkyChefs’ fleet and infrastructure, and a strategy that puts customer trust and operational excellence at its core.

Airline catering is often viewed as cyclical, vulnerable to fluctuations in passenger volumes and economic conditions. But the story of today’s SkyChefs paints a different picture: three years after its 2023 acquisition from Deutsche Lufthansa, a rapid and highly successful transformation can be revealed.

Why did AURELIUS invest in LSG Group?
The investment thesis was rooted in the business’ role as a mission-critical, often mandatory service deeply embedded within aviation itself. AURELIUS identified LSG Group as an undermanaged market leader with long-term customer relationships, high operational barriers to entry and significant untapped potential once separated from a complex corporate parent. The challenge was to simplify, stabilise and rebuild it as an independent company.

This was no mean feat: when AURELIUS carved out LSG Group from Lufthansa in 2023, it took on a complex business comprising 161 legal entities in 49 countries with more than 120 customer service centres serving a global base of Tier 1 airline customers. The scale was vast, but so was the opportunity: a profitable business, even if still heavily impacted regionally by the post-COVID ramp-up, but with proven operational capability at scale and long customer relationships.

“It is a vital service for aviation,” says Franz Woelfler, Partner in AURELIUS’ Investment Team. “Catering is fundamentally tied to aviation and fully integrated in the airline customers’ operational processes.” The aviation sector itself has been growing steadily and in correlation with the long-term growth trajectory of the global economy.

Consequently, LSG Group has been far more resilient than airline catering is often perceived to be. It operates specialist production facilities, holds airport and food production related licences, manages complex just-in-time airport logistics and deploys purpose-built high-lift catering vehicles that are difficult and costly to replicate.

“It has many of the characteristics of infrastructure,” says Franz. “You have a strong lock-in with customers and long-term contracts. As long as you don’t mess up, airlines do not want to replace you.”

However, LSG Group had been a corporate orphan for a while. While most aviation markets had largely recovered post-pandemic, underinvestment and legacy structures made its North American business a priority to be addressed. Customer confidence had weakened over the years, operational momentum had stalled and the business required renewed investment.

LSG APAC had traditionally been a region of strong profitability for the group, but ramp-up in Asia Pacific remained behind. A large central HQ in Germany was ill-suited for the non-European footprint of the business that remained after Lufthansa had sold the European business to gategroup in 2019. Also, COVID had taken its toll on the global aviation industry. “There were plenty of challenges and many investors passed on the opportunity at that time. However, we at AURELIUS saw the potential – realising it would require some heavy lifting,” Franz recalls.

How did AURELIUS help to transform LSG Group?
Rather than beginning with a lengthy strategic exercise, AURELIUS focused a largely refreshed management on what René Herzog, Senior Managing Director at AURELIUS WaterRise, describes as “no-regret moves”.

“The moment you take over a business, you need to move,” René explains. “Understand the business, bring in the right people, listen carefully to customers and familiarise yourself with the economics. Then start working straight away on underperforming areas and fix the basics first.”

The first priority was the carve-out itself. Separating systems and operations from Lufthansa began immediately, while AURELIUS WaterRise and management simultaneously assessed where investment would create the greatest impact.

How did AURELIUS help to future-proof today’s SkyChefs?
Leadership was strengthened early to ensure the bandwidth and fresh thinking were in place for where the business was going, while regional operating models replaced an obsolete centralised structure.Functions such as IT, safety and operational support were moved closer to customers, enabling regional teams to respond faster and more effectively. The central HQ were moved to regional headquarters to better reflect the regional customer footprint.

Going all in
“There is no two ways about it – we went all in,” says René. “We wanted to grow the business, and for that we needed to make it the best it can be. So AURELIUS spent more money, resources and people on LSG Group than on any other portfolio asset. We were convinced it was worth it.”

Indeed, around 50 members of the firm’s then 120-strong WaterRise operational team were working on the business globally in the early days. Significant internal resources were deployed alongside investment into new equipment, automation and operating improvements. Over the first two years of ownership, AURELIUS’ involvement has been scaled back significantly as new management bedded in and took full control.

There were also bold moves: the US business recently relaunched under its original SkyChefs brand, and – financially supported by its owner – invested heavily into the physical infrastructure of the business. Almost $70 million was committed to the largest-ever high-lift truck order in SkyChefs’ history, modernising more than a quarter of the fleet over a short timeframe. The order kept all specialist manufacturers of these trucks fully utilised for more than two years. Beyond efficiency improvements, the investment enhanced airport ramp safety, a key priority for airline customers and employees alike and sent a strong signal to the market.

“The truck fleet is the backbone of the business,” says René. “This was about safety, reliability and showing customers our commitment was serious.”

And of course, as a catering company, food formed a big focus. Major US airlines prioritise higher-quality food as a differentiator in in-flight customer experience again. SkyChefs invested in its culinary teams, strengthening creativity, quality and menu design capabilities.

“It is about combining culinary excellence with mass production,” says René. “Airlines’ willingness to purchase premium onboard food is returning.” Today, SkyChefs delivers approximately 120 million meals annually and operates 34 customer service centres across the US alone.

Who are SkyChefs’ customers?
The clearest proof of the transformation is the commercial momentum. In airline catering, contracts are typically large, sticky and long term. Winning a major airline hub changes a business’ growth trajectory – as was the case when SkyChefs was awarded the San Francisco hub of a major carrier in 2025.

The contract, worth 10-figures across five years, represented the largest win since the business became independent, serving as visible proof that customer trust had been rebuilt. It added 10% to SkyChefs’ US revenues almost overnight.

“Winning a major hub is a strong testament of what we have achieved,” says René. “The San Francisco win showed the new strategic focus on investing properly, and this effort to rebuild trust is recognised by our customers.”

SkyChefs has significantly expanded its position as the clear market leader in the US, with further contract wins following across other regions. Today, major carriers including United, American Airlines, Delta and Alaska Airlines account for the majority of SkyChefs’ US business.

An investment already paying off
Also, on the other side of the globe, the joint efforts of AURELIUS and the management team were rewarded earlier this year.

On the back of its leading market position in the Asia Pacific region, LSG APAC attracted strong inbound interest from both strategic and financial buyers. A competitive process saw a Japanese consortium comprising Kobe Bussan and GOURMET KINEYA purchase LSG APAC.

“The sale followed a period of AURELIUS-supported operational improvement that saw LSG APAC emerge as a strong, fully independent regional champion. We believe Kobe Bussan and GOURMET KINEYA are a great long-term owner. For AURELIUS, this deal has been attractive as it returned our entire investment,” says Franz.

“We want to continue to make the SkyChefs business as strong as possible,” says René “and we remain excited about the future.“